TSX-V: HEO
Alternext: MNEMO: ALHEO
- Revenues up at $36.1 million,
compared to $35.9 million in fiscal
year 2012.
- Gross profit up at 25.6%, compared to 23.0% in fiscal year
2012.
- Adjusted EBITDA at $1,584,252,
compared to $12,172 in fiscal year
2012.
- Operating, selling and administrative expenses down by
$1,017,000, at 21.4% of revenues,
compared to 24.3% in fiscal year 2012.
- Net earnings up to $312,992
compared to a net loss of ($8,054,860) in fiscal year 2012.
- Operating activities generated $1,053,591 in net cash, compared to $815,699 in fiscal year 2012.
All amounts in Canadian dollars unless otherwise
stated.
QUEBEC CITY,
Sept. 25, 2013 /CNW Telbec/ - (TSXV:
HEO) - H2O Innovation Inc.
("H2O Innovation" or the "Company") announces its
results for the fourth quarter and 2013 fiscal year ended
June 30, 2013. H2O
Innovation's fiscal year 2013 results showed revenues of
$36.1 M up from $35.9 M for fiscal year 2012. The Company's gross
profit improved over the year from 23.0% in fiscal year 2012 to
25.6% in fiscal year 2013. Net cash generated by the Company's
operating activities amounted to $1,053,500 compared to $815,699 during the previous year.
''2013 was a great year marked by slight
slowdown in the fourth quarter. All in all, we are extremely proud
to show our investors that we can deliver positive results and we
certainly look forward to maintain this momentum from many years to
come. Some of the changes we have implemented at the beginning of
the year clearly paid off and we can acknowledge that all
measurements are showing signs of improvement. Revenues, net
earnings, cash flows, EBITDA and SG&A expenses level are all
moving in the right direction and this gives the company great
hopes for the future'', stated Frédéric Dugré, President and
Chief Executive Officer of H2O Innovation.
In fiscal year 2013, revenues from water
treatment projects stood at $22.9 M
compared to $24.2 M in fiscal year
2012, while revenues from specialty chemicals and consumables
reached $13.2 M in fiscal year 2013
compared to $11.7 M in fiscal year
2012. The resulting shift in the revenue mix, with an increased
contribution from the more profitable consumable business, explains
the improved combined gross margin. "This nearly 13% increase of
revenues from specialty chemicals and consumables is the result of
the strategic decision to build and reinforce long-term
relationships with our customers and to expand our distribution
network; thus bringing a continuous stream of revenues. The growth
of this revenue line is strengthening the Company's foundation
which will allow us to leverage our system business. These
decisions contribute to create value for our shareholders", stated
Frédéric Dugré, President and Chief Executive Officer of
H2O Innovation.
Management expected total revenues to increase
more than they did during fiscal year 2013.They were impacted
negatively by the termination, on June
27th 2013, of an agreement to provide a containerized water
treatment system for a U.S. municipality due to a default of
payment from the customer. The equipment was built and ready to be
delivered when the agreement was terminated. The Company has
instituted legal procedures against the general contractor to seek
compensation for the damages it sustained. The Company has also
initiated a mediation process through the American Arbitration
Association to achieve a settlement.
Despite this project being cancelled in the
fourth quarter, the Company recorded net earnings of $312,992 or $0.005
per share for fiscal year 2013 compared to net loss of ($8,054,860) or ($0.134 per share) for fiscal year 2012. This
improvement is attributable to three main factors. First, the
Company maintained a high level of revenues, which generated
satisfying gross profit margin. Second, management closely
monitored the SG&A and was diligent in finding additional
savings. Finally, the Company did not suffer from goodwill
impairment, impairment of intangible assets and changes in fair
value of contingent considerations in fiscal year 2013 compared to
fiscal year 2012.
|
|
|
|
CONSOLIDATED RESULTS
Selected financial data |
Three-month
periods
ended on June 30,
(Unaudited) |
|
Twelve-month
periods
ended on June 30,
(Audited) |
|
2013 |
2012 |
|
2013 |
2012 |
|
$ |
$ |
|
$ |
$ |
Revenues |
6,768,455 |
11,561,332 |
|
36,136,901 |
35,909,907 |
Gross profit |
1,812,428 |
2,237,294 |
|
9,251,537 |
8,275,358 |
Gross profit |
26.8% |
19.4% |
|
25.6% |
23.0% |
Operating expenses |
202,544 |
178,487 |
|
696,079 |
642,880 |
Selling expenses |
907,553 |
1,094,547 |
|
3,509,081 |
3,906,263 |
Administrative expenses |
890,226 |
1,409,303 |
|
3,533,042 |
4,206,086 |
Net earnings (loss) |
(532,392) |
880,620 |
|
312,992 |
(8,054,860) |
Basic and diluted earnings (loss) per share |
(0.008) |
0.014 |
|
0.005 |
(0.134) |
Adjusted EBITDA |
(234,355) |
(467,088) |
|
1,584,252 |
12,172 |
Adjusted EBIDTA |
(3.5%) |
(4.1%) |
|
4.4% |
0.0% |
The Company secured $19.2
M in new bookings for water treatment projects over fiscal
year 2013, representing an 18% increase compared to the previous
fiscal year. The Company's bookings over revenue ratio for projects
and equipment stood at 0.78 for fiscal year 2013, compared to 0.67
for fiscal year 2012.The order backlog stood at $14.1 M as of June 30,
2013. The current pipeline is rich in opportunities which
will allow the Company's sales backlog to maintain revenue growth.
"We maintain strong bidding activities and management efforts are
aimed at growing the Company's sales backlog", stated Frédéric
Dugré. These efforts include the strategic hiring of David Faber as Director of Systems Sales
USA, who has already taken the
lead of the U.S. systems sales and the hiring of a sales manager
based in British Columbia to
develop this promising market where there are numerous
opportunities for workers camps: a niche in which H2O
Innovation has a very unique offering.
The Company's ratio of selling, operating and
administrative expenses ("SG&A") as a whole over revenues
amounted to 21.4% for fiscal year 2013, down from 24.3% for the
previous fiscal year. The improvement of this ratio is partly the
result of the important reorganization initiated since June 30, 2012.
Adjusted EBITDA for fiscal year 2013 was
$1,594,252 compared to $12,172, for fiscal year 2012. The adjusted
EBITDA has significantly improved in fiscal year 2013 due to the
important decrease of $1,017,000 of
SG&A expenses and the increase of revenues derived from
specialty chemicals and consumables. ''Controlling costs is key to
be profitable in such a competitive environment. "This year, we
surely felt strongly that everyone in the Company made extra
efforts to reduce our expenses and it made a difference; we will
strive to make this close attention to expenses as part of our
ongoing company culture", stated Frédéric Dugré.
Net cash generated by operating activities
amounted to $1,053,500 in fiscal year
2013 compared to $815,699 of net cash
generated by operating activities during the previous fiscal year.
This improvement is attributable to the significant improvement in
net earnings in fiscal year 2013 compared to fiscal year 2012. This
significant improvement is also attributable to the following
factors:
- Lower volume of activities toward year-end reflected in a
decrease of the level of accounts receivable as of June 30, 2013 compared to June 30, 2012;
- This lower volume of activities has also decreased the level of
accounts payable and accrued liabilities in fiscal year 2013
compared to fiscal year 2012;
- A tighter follow-up of accounts receivable accelerated payments
from customers;
- A timing difference between the projects execution phases and
the invoicing milestones reached affecting costs incurred in excess
of billings and billings in excess of costs incurred; and
- The project termination, for which the equipment has been
recorded as finished goods, has increased the inventory level in
fiscal year 2013 compared to fiscal year 2012.
Financial results for the fourth quarter of
fiscal year 2013
Revenues for the fourth quarter were down to $6.8 M from $11.5 M
for the same quarter of the previous fiscal year. The decrease is
explained by the fact that a significant project was delivered at
the end of fiscal year 2012 generating record-high revenues for
that comparable quarter of the previous fiscal year. In addition,
the 2013 fourth quarter was negatively impacted by the cancellation
of a project with a U.S. customer.
For the quarter ended June 30, 2013 the gross profit was impacted
negatively by the decrease in the volume of projects executed but
this impact was minimized by the increase of $500,000 in revenues from specialty chemicals and
consumables for which gross margin is higher than for revenues from
water treatment projects.
The fourth quarter SG&A expenses were
somewhat stable and similar to the first three quarters of fiscal
year 2013. They stand at $1.9 M in
this current quarter compared to $2.7
M in the fourth quarter of fiscal year 2012. Last year's
fourth quarter was impacted by items that did not occur this year
such as termination costs related to the elimination of top
management positions along with the re-organisation, by an
allowance for doubtful accounts for a distributor of maple syrup
production products within the consumables operations and by
additional professional fees related to the impairment tests.
The fourth quarter net loss is caused by the
lack of volume in revenues of the Company: notably due to the
termination of a project in the USA for which the equipment already
manufactured has been accounted for as finished goods in the
statement of financial position.
Strategic outlook for fiscal year
2014
For fiscal year 2014, we aim at increasing our footprint through
the addition of new specialty chemical distributors and enhanced
support to our existing ones, helping them increase their market
shares. In June 2013, we hired a new
sales regional manager for specialty chemicals whose primary
responsibilities at Professional Water Technology ("PWT")
include identifying new commercial opportunities
and providing technical support for PWT's client base in
the Southeast USA. In addition, we
held our second annual international distributor summit in
July 2013. During the summit, our
distributors were given technical and commercial training on new
chemical products.
Our revenues from specialty chemicals and
consumables include sales of products related to maple syrup
production. These revenues increased by more than 11% in fiscal
year 2013 compared to fiscal year 2012. During the year, we have
hired a director of sales in the United
States who was able to expand our distribution network in
that territory where there is no production quota for maple
farmers; this clearly helped to increase our revenues from this
division. We intend to accelerate this growth by expanding our
distribution network in the U.S. territory and other Canadian
provinces, a young market rapidly expanding.
In the system business, management is convinced
that developing long-term relationships is key to generate
recurring revenues. Initiatives such as providing first fill of
chemicals, offering preventive maintenance and performance
monitoring contracts clearly differentiate H2O
Innovation from its competitors in the market place; it is a way to
secure early on the recurring revenues for years to come. Also, by
providing our proprietary specialty chemicals together with the
delivery of custom-designed membrane systems, we are proposing a
"single point of responsibility" for the reliability and
performance of the systems. This strategy shows how the system
sales and downstream associated recurring revenues are intimately
linked.
To strengthen system sales and increase
differentiating factors, the Company has also announced this year
the introduction of two innovations. The first one is the
introduction of its new FiberFlexTM MF/UF membrane module rack
design. This skid is physically designed to accommodate several
types of microfiltration and ultrafiltration modules. This
innovation will allow the Company to enhance its offer and
reinforce its leading position in the water treatment industry.
Engineers and customers will greatly benefit from this added
flexibility in design and operation that provides procurement
leverage to the end-user for the membrane replacement. The
Company also launched another innovative platform with a second
generation containerized and dual train Membrane Bioreactor
dedicated to wastewater effluent. This will be by far the most
compact and versatile containerized wastewater treatment package on
the market to offer treatment redundancy usually found only in much
larger plants. The product will be presented to key customers
at the largest wastewater focused conference in North America, WEFTE, held in Chicago the second week of October 2013.
The annual financial report is available on
www.h2oinnovation.com and on NYSE Euronext Alternext's site.
Additional information on the Company is also available on SEDAR
(www.sedar.com).
Prospective disclosures
Certain statements set forth in this press release regarding the
operations and the activities of H2O Innovation as
well as other communications by the Company to the public that
describe more generally management objectives, projections,
estimates, expectations or forecasts may constitute forward-looking
statements within the meaning of securities legislation.
Forward-looking statements concern analysis and other information
based on forecast future results, performance and achievements and
the estimate of amounts that cannot yet be determined.
Forward-looking statements include the use of words such as
"anticipate", "if", "believe", "continue", "could", "estimate",
"expect", "intend", "may", "plan", "potential", "predict",
"project", "should" or "will", and other similar expressions, as
well as those usually used in the future and the conditional,
notably regarding certain assumptions as to the success of a
venture. Those forward-looking statements, based on the current
expectations of management, involve a number of risks and
uncertainties, known and unknown, which may result in actual and
future results, performance and achievements of the Company to be
materially different than those indicated. Information about the
risk factors to which the Company is exposed is provided in the
Annual Information Form dated September 25,
2012 available on SEDAR (www.sedar.com). Unless required to
do so pursuant to applicable securities legislation,
H2O Innovation assumes no obligation to update or
revise forward-looking statements contained in this press release
or in other communications as a result of new information, future
events and other changes.
About
H2O Innovation
H2O Innovation designs and provides state-of-the-art,
custom-built, and integrated water treatment solutions based on
membrane filtration technology to municipal, energy & natural
resources end-users. H2O Innovation also provides a
complete line of specialty chemicals and consumables for membrane
filtration and reverse osmosis systems. For more, visit
www.h2oinnovation.com.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) nor the Alternext Exchange
accepts responsibility for the adequacy or accuracy of this
release.
SOURCE H2O Innovation Inc.